Should You Buy This Sinking Stock on the Dip?

Core Viewpoint - Axsome Therapeutics is facing scrutiny from a short-seller report alleging inflated revenue related to its depression therapy Auvelity, which may impact its stock performance in a challenging year [1][2]. Company Allegations - Culper Research accuses Axsome Therapeutics of inflating revenue from Auvelity, a combination therapy of two inexpensive off-patent drugs, which is priced significantly higher than its components [2]. - The report claims that Axsome uses mail-order pharmacies to bypass insurer requirements, with sales representatives directing patients to these pharmacies, raising concerns about the legitimacy of its sales practices [3]. Analyst Reactions - Despite the allegations, analysts from Morgan Stanley and Citigroup have maintained buy ratings on Axsome Therapeutics, arguing that the claims lack merit and that the company's sales practices align with industry standards [4]. Product Pipeline - Axsome Therapeutics is developing a robust late-stage pipeline, including treatments for migraine, fibromyalgia, narcolepsy, and Alzheimer's disease agitation, which could enhance its product lineup in the coming years [5]. - The company reported total revenue of $75 million in Q1, a decline from $94.6 million year-over-year, but net sales of $74.1 million showed a year-over-year increase of approximately 159% [6]. Market Valuation - As of the latest update, Axsome Therapeutics has a market capitalization of $3.72 billion, which may undervalue its potential based on its pipeline [6].